Nation editor-at-large and host of MSNBC’s All In with Chris Hayes.
Yet another very busy week on the Hill. Greg Kaufmann has the goods:
The House delayed its vote on the DC Voting Rights Bill due to the Senate's draconian gun amendment. Advocates are still hopeful a less extreme alternative can be agreed to in the House-version so that 600,000 DC residents will finally get a little voting representation to go along with their taxation.
In brighter news, the House passed Rep. John Conyers' "Helping Families Save Their Homes Act". The legislation allows bankruptcy judges to reduce the principal on mortgages. According to CongressDaily, Sen. Richard Durbin hopes to bring the bill to the floor before the April recess.
The Obama Administration also began implementation of its $75 billion anti-foreclosure plan. While the plan will help an estimated 4 million borrowers reduce monthly payments through lower rates, it doesn't include as strong a provision for principal reduction as the Conyers legislation so we need the Senate to move on the bill and not water it down.
The Senate took up the $410 billion omnibus spending bill for FY09 this week. The government has been operating under a Continuing Resolution (CR) -- spending at FY08 levels -- since Congress declared enough with the Bush budgets and took a pass on his last one. A vote was expected this week but the Senate hasn't been able to get the 60 votes needed for cloture, so they have been busy defeating GOP amendments like Sen. McCain's "don't increase any spending amendment" and Sen. Murkowski's "keep Bush's last gasp rule to limit protection of polar bears amendment." They now need a new CR since this one expires at midnight tonight and voting on the omnibus isn't expected until Monday or Tuesday.
The Obama Administration held its Health Care Summit with key players across the spectrum. The President seemed to be extending his trademark olive branch to the GOP when he said, "If people think we can simply take everybody who is not insured and load them up in a system where costs are out of control ... we will run out of money…. I'm talking to you liberal bleeding hearts out there. Don't think we can solve this problem without tackling costs. And that may make some in the progressive community uncomfortable. But it's got to be dealt with." I'm wondering which progressives he's spoken with who don't know cost containment is key to universal access to healthcare? One big highlight of the summit: Sen. Ted Kennedy was there, getting back to work.
Both Kennedy -- who chairs the Health, Education, Labor and Pensions Committee -- and Senate Finance Chairman Max Baucus said they intend to produce a single comprehensive healthcare bill. Baucus hopes the bill will be on the floor in July. House Majority Leader Steny Hoyer wants a bill by August.
Treasury Secretary Tim Geithner and OMB Director Peter Orszag were on the Hill talking budget and taxes with congressional committees. Orszag defended against GOP charges that the Administration's recovery projections are too optimistic while Geithner was open to Baucus' concerns about limiting deductions for the wealthy. (No surprise there since Geithner viewed taxes as optional in his previous life.) On Tuesday Fed Chairman Ben Bernanke had the unenviable task of testifying about another cool $30 billion being doled out to AIG. Sen. Bernie Sanders also pressed Bernanke to reveal which banks received $2.2 trillion in taxpayer money from the Fed. Bernanke refused, and Sanders has now introduced legislation to compel disclosure.
Defense contract reform was huge this week -- with President Obama, and the Senate and House Armed Services Committee all taking it on. This is no small matter, since the GAO has found cost overruns of at least $300 billion for the top 75 weapons systems in 2008. But some of the leaders for reform here -- like Sen. Carl Levin -- are the same characters who will fight against sensible cuts to Cold War weaponry.
In other news… Sen. Pat Leahy held a hearing on his proposal for a truth and reconciliation commission to examine the Bush-Cheney Constitutional assault.... Rep. Rush Holt introduced legislation to establish a 9/11-style commission to investigate the 2001 anthrax attacks and government response… a FEMA Deputy Administrator revealed that Republican governors Haley Barbour and Bobby Jindal have failed to spend half the funds allocated for clean up, bridges, roads, schools…. Rep. John Tierney held a hearing this week and posed the question of whether it's in our national security interest to send more troops to Afghanistan to prevent a safe haven for Al Qaeda when it already has one in Pakistan and could easily establish them in Yemen, Somalia, Sudan, Algiers, etc.?
Today in Columbus, Ohio, Sen. Sherrod Brown and Pres. Obama attended the graduation ceremony for 26 police academy cadets who had been laid off during their training and then rehired with the passage of the Recovery Act.
In the short-term, I think the answer is no. As I argued in my column last week, the plan does fairly elegantly snatch some low-hanging fruit. But the problem is that there's just not enough fruit on the low branches to really get at the problem.
In the week or so since I've written the column, I've become more convinced that it's just not going to get the job done. Originally I had a graf in the column that said, more or less, that a useful way to think about the mortage problem is as an interest problem and a principal problem. That is, on the one hand the rates people are paying are too high, thanks to teaser rates, ARM's, fees, etc..., and on the other the prices of their homes are just over-valued. Alyssa Katz, explains just what this means in terms of the plan's shortcomings:
For many borrowers, a lower payment will be all the difference between staying in one's home and going into foreclosure -- for now. But the Obama plan is a short-term fix. It doesn't do the one thing that would actually help homeowners in the long haul, and that is reduce the amount of principal they owe. The loan mods that these brokers are selling, and that the Obama administration is now promoting, are new and improved variations on the exotic mortgages that seduce borrowers in the first place. They charge a manageable amount now, and then hit the borrower with higher costs down the road.
"Loan modification success rates are ridiculously low," agrees Debra Zimmerman, an attorney with Bet Tzedek Legal Services in Los Angeles who represents borrowers. "Until banks are ordered to reduce principal too, there will be no solution."
Over at the Corner he writes.
While some conservative bloggers plunge into depths of despair that Rush Limbaugh gave a speech at CPAC not up to their standards and the White House congratulates itself over its supposed cleverness in elevating Rush, can we all take a deep breath please? Barack Obama and the Democrats have the initiative. Until such time as their policies are perceived to have failed, it doesn't matter too much what Republicans do. Yes, they obviously should endeavor to be sober and creative--replenishing their policy arsenal for the day when the public is seriously paying attention to them again--but the big question in American politics right now is how Obama handles the financial crisis and the economy. In the grand scheme of things, everything else is commentary.
This is true across the political spectrum. It's very easy to get caught up in the cable-news cycle. And, indeed, one of the Obama crew's chief virtues in their determination to take the long view. Ultimately, the political success of the White House is going to depend on its performance in avoiding a depression. Of course, the arrow of causality doesn't run one way. Obama needs to be politically deft and imposing in order to pass an agenda that has a hope of forestalling said depression. But this isn't a campaign and it's not the Clinton years, despite the degree to which much of our political culture remains habituated to both.
I've been making my way through the first season of the West Wing (a little latae, I know!) and I'm just struck by how trivial the politics of that time seem. They're constantly dealing with blow-ups over flag burning amendments or White House staffers using drugs. These days no one would care. We have very, very very serious problems on our hands and the political fate of Obama, and to a broader extent the American left is going to rise or fall on whether the people currently running a government do a good job of solving them.
Obama went further in remarks at the White House, calling it a "false choice" to say that protecting the country requires acquiescence to Pentagon waste. "In this time of great challenges," he said, "I recognize the real choice between investments that are designed to keep the American people safe and those that are designed to make a defense contractor rich." He also lent support to Sens. Carl Levin (D-Mich.) and former presidential rival John McCain's (R-Ariz.) legislation to create new procurement oversight positions at the Pentagon. "The days of giving defense contractors a blank check are over," Obama said.
...Obama has now placed defense-contracting reform at the center of his efforts at cutting wasteful spending, and he's put cutting wasteful spending at the core of his deficit-reduction approach; and both the press and the Republican Party will watch that deficit-reduction approach as a test of his presidency. That line from his YouTube address on Saturday about being ready for a fight with lobbyists over his budget? He might mean it.
The American Federation of Government Employees (AFGE) was also happy:
"For too long, American taxpayers have had to foot the bill for unnecessary, and costly projects that have served only to line the pockets of contractors," said AFGE National President John Gage..."This administration intends to stop contracting out government services that should be performed by federal employees...We hope this is the end of the era of privatization during which agencies were forced to contract out regardless of cost or quality, and at the expense of integrity and accountability of federal programs."
From a structural budgetary perspective two of the most pernicious but least noticed trends of the Bush administration have been the explosion of contracting and the massive increase in defense spending. It cannot be repeated enough that defense spending over the last eight years -- not including the two wars -- has increased a shocking 77%. Anyone serious about "fiscal responsibility" should start with the low-hanging fruit and that's Pentagon procurement. Kudos to the White House for getting the ball rolling.
This was a very busy week on Capitol Hill. Greg Kaufmann provides the highlights:
Obama's Big Week: Monday was the President's "fiscal responsibility summit." Tuesday was his big speech to the joint chamber of Congress, all of which was paving the way for Thursday's unveiling of the new budget. In it, Obama makes good on a lot of campaign promises -- including raising taxes on people earning more than $250,000, as well as multinationals, hedge funders, oil companies; cutting taxes for low- and middle-income people and businesses; raising revenues for clean energy technologies through a cap-and-trade system; making a $634 billion "downpayment" on healthcare reform over 10 years; and $47 billion towards education that includes $2.5 billion in new grants to help low-income students attend college, and expanding Head Start and Early Head Start…. The document makes some important strides in transparency, using a 10-year horizon instead of 5-year, and including the costs of the wars in Iraq and Afghanistan -- which previously were left off the books…other cool random items: no more Yucca Mountain -- time to get a new plan; $1 billion for child nutrition programs, including combating obesity which requires spending more money on healthy foods.
Rhetoric Preview: I loved this doozey from Jade West of the National Association of Wholesaler-Distributors, who told CongressDaily, "This budget clearly divides Americans by resurrecting tired old policies based on class envy and warfare, which punish success. This is a path to transforming the United States into Socialist Europe."
Bernanke's Rosy Picture: Fed Chair Ben Bernanke told the Senate Banking Committee that "there is a reasonable prospect that the current recession will end in 2009 and that 2010 will be a year of recovery." Economist James Galbraith testified to the House Financial Services Committee that Bernanke's deluded and that could be problematic in terms of crafting sufficiently bold policies: "Chairman Bernanke, in his speech at London in January, said ‘the global economy will recover.' He did not say how he knows. And the truth is, this is merely a statement of faith. In present conditions the most dangerous position is that of the unfounded optimist."
Foreclosure Relief? HUD Secretary Shaun Donovan seemed to follow Bernanke to economic fantasy land. He told the Senate Banking Committee that the Administration will release its foreclosure plan guidelines next week and that "certainly in April we will see a significant decline in foreclosures." Let's hope he's right, because Congress can't seem to get its act together on its plan to allow bankruptcy judges to modify mortgages. They were supposed to vote this week, but according to CongressDaily the Blue Dogs and New Democrats got nervous that the Senate wouldn't act with the same boldness, and so they punted. "We have done everything for the bankers and investment companies and here we do a little something for foreclosure for the homeowner and everybody is ‘oh, let's be very careful,' "Conyers said.
A Little Representation With That Taxation? 600,000 DC residents moved a step closer to voting Representation in the House. In the Senate, the bill got the 60 votes it needed to reach the floor where it was ultimately approved -- with a hitch. A gun amendment would repeal local gun control laws, including registration requirements and a ban on semiautomatic weapons. A clean bill will in all likelihood pass the House next week and then it will be up to a conference to resolve the dispute. Ilir Zherka, executive director of DC Vote, said of the gun amendment: "It's going to cause problems."
Military Spending Madness: Rep. Barney Frank convened a forum to discuss ways to restrain excessive military spending. Congressional Progressive Caucus Co-Chair, Rep. Lynn Woolsey, also participated, along with CPC Reps. Barbara Lee, Dennis Kucinich, and Keith Ellison. Dr. Lawrence Korb of the Center for American Progress cited a study by the Institute for Policy Studies estimating over $100 billion could be saved by cutting waste and eliminating obsolete weapons systems. A senior congressional staffer told me, "The bottom line is that we are once again going to push for about $60 billion in cuts to the DoD budget mainly based around the ‘Cold War' weapons systems." Frank emphasized the importance of grassroots pressure if they are going to be successful in taking on entrenched Dems.
Iraq Withdrawal (Sort of): Today, President Obama is expected to announce his plan to withdraw from Iraq by August 2010 -- that is, other than 35,000 to 50,000 troops. Those troops would have to stick around through December 2011. Sen. McCain and Rep. Boehner signaled support (yikes). Reid and Pelosi weren't too thrilled with the "transition force."
Other News: Rep. Hilda Solis is finally in as Labor Secretary, confirmed 80-17…. Sen. Burris is in a state of denial and sends out mundane press releases daily…. Former Washington Gov. Gary Locke hopes that third time is a charm now that he is the new Commerce Secretary-designate…. Sen. Bernie Sanders and Majority Whip James Clyburn introduced legislation that would provide primary healthcare for all Americans.
In this week's column on the Obama foreclosure plan I write:
This is all significant progress over the callous inaction of the Bush administration. But though the Obama foreclosure plan threads the needles of the various interests, there is still a lot of painful stitching left. The main problem at the heart of the real estate and financial crises is that hundreds of billions, perhaps trillions, of dollars that were once part of the economy now aren't.
Dean Baker writes in to gently chastise me for my hedging:
there is no "perhaps trillions" about the money lostin housing. House prices are down around 30percent from where they were two and a half years ago. That translatesinto a loss of more than $6 trillion in housingwealth. There is no "perhaps" in that sentence, it's straight arithmetic.
Good point. My hedging was meant to indicate that we don't know how much or how long it will take for the housing market to rebound. But as a descriptive statement about the present: it's pretty straightforward. At least $6 trillion in housing wealth has vanished.
Since I've been giving Gary Gensler such a hard time for refusing to admit a mistake, I thought it would be appropriate to pointed out just how colossally I screwed up the math in my column on the Pentagon budget. (Lucky for me it was behind the sub wall!)
The correction, which runs in this week's issue, is also behind a subwall, so I'll post below in all its mortifying glory:
Correction: Those Pesky Decimals
There were three computation errors in Christopher Hayes's March 2 "Cut the Military Budget." The Pentagon budget request represents a 13 (not 12) percent increase over last year's budget. The reported Obama Defense Department appropriation would represent a 2.2 percent increase over last year's budget (not 8 percent). And regarding the F-22 Raptor fighter jet, $3.4 billion divided by 95,000 works out to $35,800 per job (not $35.8 million). So it is not true that "more jobs would be created by hiring people to shred the money." We deeply regret the errors and have FedExed a new abacus to our Washington bureau.
Just got off a briefing with OMB Director Pete Orszag. I asked him what part of the budget he was surprised hadn't gotten more attention. His answer: universal savings. One of the central planks of the whole nudge crowd of behavioral economists is automatic enrollment in 401k's. Turns out there's a huge difference between participation rates in pension plans when people are automatically enrolled and when they have to proactively enroll. But as Orszag pointed out, most low wage workers don't work at firms that even 401k's, so automatic enrollment doesn't help them. As part of the new budget proposal, almost every employer would have to automatically enroll every employee in an IRA. Only very small businesses would be exempt. This seems like a smart idea at first blush. And it's perfect example of the Obama folks' policy approach.
Some more thoughts on the budget TK.
UPDATE: Ben Smith has more.
In my column, Never Say You're Sorry, I wrote about Gary Gensler, the Obama administration's nominee to head the Commodity Futures Trading Commission. Yesterday the Senate Agricultural Committee held hearings on the nominee, and Laura Dean was there. She sends this dispatch:
"I will stand up and say I made a mistake," declared Rep. Kent Conrad, with a hard look toward Gary Gensler. "All of us need to ‘fess up." Conrad was referring to the Commodity Futures Modernization Act of 2000 (of which Gensler was a vocal advocate) that mandated that credit default swaps remain unregulated and led in part to the current economic crisis.
Rep. Tom Harkin had tried a different tack earlier in the afternoon when he quoted Gensler's own testimony from May 18th 1999, "I positively unambiguously agree" with Larry Summers in opposing this regulation.
But no amount of brow-beating from the senators could get Mr. Gensler to admit that he might have made an error in judgment. Gensler's refrain remained that this crisis was a "dot on the horizon;" something no one could possibly have foreseen. Somewhat puzzlingly though, Gensler insisted, "we should have fought harder for regulation" and "for some of the things we suggested at the time." I don't think I was the only one in the room wondering which "we" Mr. Gensler was referring to. Which Gary Gensler was this that had been a soft-spoken advocate of regulation all along?
Better foresight will be particularly important for the next CFTC commissioner with the forthcoming creation of a cap and trade system that, as Rep. Stabenow pointed out, "will create the largest derivative market in the world." The next commissioner will be charged with regulating an entirely new market. Yet while Gensler was quite adamant that a cap and trade system should fall under the jurisdiction of the CFTC, he was unable to address any of the specifics such a plan might entail.
In an argument that he and his supporters ground in personal rather than professional history -- he "brings values," said Sen. Mikulski. "He's committed to our community," said Sen. Cardin -- one wonders why a simple "I'm sorry" is so difficult. Could it be that he doesn't think he made a mistake, that this situation really was unavoidable? If so, this raises serious concerns about the vision of a man who might have to make some pretty far-sighted decisions in the coming years.
There's been some pretty awesome grassroots mobilization around MSNBC's 10pm time slot, with Facebook groups devoted both to Sam Seder and Cenk Uygur of the Young Turks. Today Chris Bowers unveils the Case for David Sirota.
TV is an absurdly powerful medium. I've been seeing this first-hand for the last few months and still can't get over its reach. Having progressives on TV is really good for the nation's politics, and my friend David would totally tear it up.